California v. Safeway: Antitrust Risks of Employer Mutual Aid Assistance Agreements

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On July 12, in California v. Safeway,1 the Ninth Circuit Court of Appeals, sitting en banc, held that a mutual strike assistance agreement among four supermarket chains was subject to challenge under the “rule of reason” standard. The court held that a revenue-sharing provision of the agreement at issue was not protected by the nonstatutory labor exemption to the antitrust laws, but overturned a prior decision that had summarily condemned the agreement under the so called “quick look” standard. The more lenient rule-of-reason standard requires courts to consider the full competitive impact of a challenged agreement, taking into account the collective bargaining context of the agreement. Companies considering mutual strike assistance agreements should carefully consider the antitrust risks of such agreements, structuring those agreements to minimize their antitrust risks.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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